CommerceWest Bank (OTCBB: CWBK) announced today its financial results for the three and nine months ended September 30, 2010. The company reported earnings for the three months ended September 30, 2010 of $8,000 or $0.01 per basic common share and $0.01 per diluted common share, as compared to net income of $1.0 million or $0.27 per basic common share and $0.26 per diluted common share for the three months ended September 30, 2009, a decrease of 99%. Net income for the nine months ended September 30, 2010 was $510,000 or $0.12 per basic common share and $0.12 per diluted common share, as compared to a loss of $1.2 million or $(0.26) per basic common share and $(0.26) per diluted common share for the nine months ended September 30, 2009, an increase of 141%.

Financial performance highlights for the nine months ended September 30, 2010:
  • Year to date income of $510,000
  • 34% increase in non-interest income year over year
  • A fortress balance sheet, with a tier 1 leverage ratio of 12.24% and total risk based capital ratio of 20.08%
  • 3.65% provision for loan losses as a percent of total loans on the CommerceWest Bank portfolio
  • 28% decrease in non-performing assets from 12/31/09
  • Strong liquidity with a liquidity position to total assets ratio of 24%
  • No TARP funds

Total assets decreased $63.3 million as of September 30, 2010, a decrease of 17% as compared to the same period one year ago. Total loans decreased $70.4 million as of September 30, 2010, a decrease of 29% over the prior year. Total deposits decreased $55.1 million as of September 30, 2010, a decrease of 18% from September 30, 2009. Stockholders’ equity on September 30, 2010 was $43.8 million, an increase of 2% as compared to stockholders’ equity of $42.9 million on September 30, 2009.

Mr. Ivo Tjan, Chairman and CEO, said, “The Bank has aggressively de-levered the assets of Discovery Bank. The Bank successfully moved out over $50 million in high cost non-core relationship deposits. The Bank has also aggressively reduced non-performing and criticized assets. The net result has been the strengthening of the Bank’s tier 1 leverage ratio, which has increased 6% from the prior year to 12.24%, as well as strengthening the total risk based capital ratio, which increased 31% to 20.08%, without raising additional capital. We have substantial capital and liquidity to deploy and attract new business clients, which will be part of our strategy for the remainder of this year and 2011.”

Provision for loan losses for the three months ended September 30, 2010 was $690,000 compared to $575,000 for the three months ended September 30, 2009, an increase of 20%. Provision for loan losses for the nine months ended September 30, 2010 was $2,215,000 compared to $6,745,000 for the nine months ended September 30, 2009, a decrease of 67%.

The Bank’s allowance for loan losses as a percent of total loans was 3.65% for the CommerceWest Bank portfolio on September 30, 2010 as compared to 2.76% on September 30, 2009, an increase of 32%.

Non-interest expense for the three months ended September 30, 2010 was $2,532,000 compared to $2,804,000 for the same period last year, a decrease of 10%. This favorable trend in the third quarter is attributable to the Bank’s continued efforts to review and improve the operating efficiency of the Bank.

Capital ratios for the Bank remain above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of September 30, 2010, the leverage ratio, tier 1 capital ratio, and total risk-based capital ratio was 12.24%, 18.82% and 20.08%, respectively.

CommerceWest Bank is headquartered at 2111 Business Center Drive in Irvine, CA, with Regional Offices in Orange County, Riverside County, Los Angeles County and San Diego County. We are a full service business bank and offer a wide range of commercial banking services, including, concierge services, remote deposit solution, full-service internet banking, lines of credit, term loans, commercial real estate lending, SBA lending, and full cash management.

Mission Statement: CommerceWest Bank will create a complete banking experience for each client, catering to businesses and their specific banking needs, while accommodating our clients and providing them high-quality, low stress and personally tailored banking and financial services.

Please visit www.cwbk.com to learn more about the bank. “BANK ON THE DIFFERENCE”

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, balance sheet management, expanded net interest margin, the ability to control costs and expenses, interest rate changes, financial policies of the United States government and general economic conditions. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments.
                   
THIRD QUARTER REPORT - SEPTEMBER 30, 2010 (Unaudited)
     
BALANCE SHEET September 30, Increase
(dollars in thousands) 2010 2009 (Decrease)
 
ASSETS
Cash and due from banks 54,661 64,633 -15 %
Securities 63,177 45,931 38 %
 
Loans 172,429 242,792 -29 %
Less allowance for loan losses   (4,150 )   (3,366 ) 23 %
Loans, net 168,279 239,426 -30 %
 
Bank premises and equipment, net 919 671 37 %
Other assets   22,984     22,635   2 %
Total assets   310,020     373,296   -17 %
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing deposits 62,826 83,461 -25 %
Interest bearing deposits   195,397     229,876   -15 %
Total deposits 258,223 313,337 -18 %
Total borrowings 6,500 14,000 -54 %
Other liabilities   1,453     3,000   -52 %
266,176 330,337 -19 %
Stockholders' equity   43,844     42,959   2 %
Total liabilities and stockholders' equity   310,020     373,296   -17 %
 
 
STATEMENT OF EARNINGS For the Nine Months Ended Increase
(dollars in thousands except share and per share data) Sept 30, 2010 Sept 30, 2009 (Decrease)
 
Interest income 12,050 12,294 -2 %
Interest expense   2,534     2,250   13 %
Net interest income 9,516 10,044 -5 %
Provision for loan losses 2,215 6,745 -67 %
Other non-interest income 1,189 890 34 %
Other non-interest expense   7,980     6,433   24 %
Earnings before income taxes 510 (2,244 ) 123 %
Income taxes   -     (1,006 ) -100 %
Net earnings   510     (1,238 ) 141 %
 
Basic earnings per share $ 0.12 $ (0.26 ) 146 %
Diluted earnings per share $ 0.12 $ (0.26 ) 146 %
 
 

FINANCIAL RATIOS:
Return on Assets (annualized) 0.21 % -0.62 % 134 %
Return on Equity (annualized) 1.56 % -4.65 % 134 %
Efficiency Ratio 73.45 % 55.79 % 32 %
Net Interest Margin 4.45 % 5.59 % -20 %
 

CAPITAL RATIOS:
Tier 1 leverage ratio 12.24 % 11.55 % 6 %
Tier 1 risk-based capital ratio 18.82 % 14.06 % 34 %
Total risk-based capital ratio 20.08 % 15.31 % 31 %

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